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It's time to get your affairs in order. If you are 40 and still running marathons, it's not too early to think about estate taxes. If you are 80 and confronting a terminal illness, it's not too late.

End-of-life tax-ducking techniques can cut income taxes as well as federal estate and state estate and inheritance taxes. They work best if you are happily married to your first spouse, you're both U.S. citizens and you have living descendants. For taxpayers who don't fit in this neat category (for example, someone who has children from another marriage), things get more complicated. In that case consider the recipes here just a starting point for a discussion with a lawyer.

The checklist begins with a staple of estate planning: Grant your spouse a power of attorney to use your assets to make gifts or set up trusts. That piece of paper could be crucial if at some point you become incapacitated. Without it your family may be struggling futilely with a guardianship application in a probate court while a Dec. 31 deadline looms.

Next, create separate investment accounts for yourself and your spouse. Ideally, you should have done this years ago, says John Scroggin, a Roswell, Ga. estate attorney. Separate accounts give you flexibility in moving assets. By playing hot potato with a securities position, you can take maximum advantage of the fact that a family escapes capital gain taxes on assets owned by a decedent.

Say taxpayer Harry is likely to live only a few years and spouse Jane has $100,000 of stock with a cost basis of $20,000. Jane transfers the shares to Harry and reacquires them under Harry's will. The $80,000 profit escapes income taxation.

Gimmicky? Yes, but Congress permits this maneuver, so long as Harry holds the shares for at least a year. If there's less time than that, there still may be a way to make the escape from capital gain taxes. The one-year rule doesn't apply if the assets do not go right back to the person who started with them.

Scroggin had a client who was supporting some less fortunate relatives, including one with Down syndrome. The client's wife got cancer. He transferred appreciated assets to her, and she bequeathed them to a trust to be used to support the relatives. She lived only 11 months, but the appreciation was never taxed. Better still, income from the portfolio ended up being taxed not in the client's high tax bracket but in the relatives' much lower ones.

The rule about assets being "stepped up" at death has a flip side that works against the taxpayer. Assets get stepped down at death. So if you die with depreciated assets, the potential capital loss that you could have claimed goes to waste. Some fancy footwork is in order.

Suppose Harry and Jane have separate brokerage accounts, each with a lot of stocks that have gone up and other stocks that have gone down. If Harry becomes gravely ill, he should sell his losers right away. Jane should hang on to her losers while selling enough winners to absorb Harry's capital losses.

Jane can immediately repurchase the stocks she sells, since the rule against wash selling, which means selling and then buying right back, does not apply to winning positions.

Result: Jane has raised the tax basis of her appreciated assets, reducing the tax bill if she sells them down the road.

If Harry has any capital loss carryforwards, they die with him. But Jane can bring them back to life. That's because, for the year when Harry dies, Jane can file a joint return.

Let's say Harry dies in July 2014 while sitting on $100,000 of capital loss carryforwards. In October Jane sells enough of the winning positions in her own account to realize $97,000 of gains. Her 2014 joint return will show a net capital loss of $3,000, the most that can be deducted in any one year against ordinary income like salary, interest and dividends.

Note that if in 2014 Jane had any capital losses or loss carryforwards of her own, they would get in the way. Jane's losses would be swallowed up by her gains before she could reach into Harry's pot of capital loss writeoffs. Conclusion: If Harry takes sick, Jane should hold off on loss harvesting for a while.

Sometime later, probably after Harry has died, Jane takes losses on her bad stocks. Then she has a capital loss carryforward that could live on for years, absorbing capital gains (on a house, say) plus $3,000 a year of ordinary income.

What if the spouse has no gains of her own with which to absorb Harry's capital losses? Then Harry should not sell his losers. He should transfer these stocks to Jane while he's still alive. She won't be able to claim Harry's loss on an asset, but she will have a smaller gain if she sells it after it has recovered. If Harry puts $100,000 into Facebook and transfers the stake to Jane when it's worth $60,000, then, if Mark Zuckerberg pulls up his socks, the first $40,000 Jane makes on the rebound is tax free.

Other writeoffs besides those on stocks and bonds are at risk at death. Maybe Harry was in the publishing business and has a $400,000 net operating loss carryforward. The last chance to claim a NOL is on the owner's final income tax return. There's a similar rule for the unrecovered cost of a lifetime annuity. If Harry spent $500,000 on annuities and has so far written off only $100,000 of principal, he's got a problem.

The solution in either of these cases is to come up with $400,000 of offsetting income, says John Olivieri, an estate lawyer at White & Case in New York City. One way to do that is to convert $400,000 of pretax traditional IRAs into Roth IRAs. With a Roth conversion, you are prepaying any tax on IRA withdrawals. In the situation described, the tax is $0. Very clever.

If Harry were single, he would have to do the conversion before breathing his last. But since he's married he'll probably leave his IRA to Jane. She can make the IRA her own (nonspouse beneficiaries can't do this). If she does, she then has until the end of the year to absorb Harry's losses with a Roth conversion.

Jane could also manufacture income for that final joint return by Rothifying a retirement account she has from her own employment.

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Go here for a library of planning checklists from the Scroggin law firm, including one relating to the terminally ill.

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A Double Tax Saver

It often makes sense to leave an IRA to a spouse. But it can also make an ideal bequest to a later generation.

Suppose you live in Houston, you’re in the top federal bracket of 35% and you expect to have an estate big enough to incur estate tax. You want to leave $135,000 to your granddaughter. At 25 she is just starting her career but is also in the 35% bracket because she lives in New York City.

Carve out a $100,000 piece of your IRA, name the kid as beneficiary and Rothify the account. When you write out a check to cover the income tax, you get $35,000 out of your estate. In effect, you have given your beneficiary both $100,000 of cash plus a prepaid tax coupon for $35,000—but only the $100,000 is subject to estate tax.

The coupon is worth a lot more than $35,000 because the youngster can make that IRA last for 58 years. Congress might someday shorten the permitted life span of inherited IRAs, but even if it does, your family is no worse off. That $100,000 is destined to be hit with a 35% income tax at some point.

Those Ungrateful Kids

The prosperous unwell think about giving money away. Money you leave or give to your spouse is free of gift/estate tax, so it doesn’t matter how you make that transfer. With other beneficiaries it matters.

You can give $13,000 a year to anyone without cutting into your lifetime gift/estate exemption. (That exemption, now $5.12 million, is set to drop to $1 million in January if Congress doesn’t act. No telling what will happen there.) This is where a power of attorney is useful; a gift can be made while the taxpayer is unconscious. To be effective in reducing estate taxes, however, those $13,000 checks have to clear the decedent’s bank account, or be certified, while he is still alive.

Bigger deathbed gifts to the next generation may make sense, too. Only Connecticut has a state tax on gifts. So tossing money around while you are still alive is likely to save your family a fair amount of state tax. Big gifts may save federal tax, too, if you have a chance of beating the reaper for 36 months. Because of the way it’s calculated, the federal gift tax is less than the estate tax, even though the rate schedule is the same. (The estate tax is applied to the value of the assets before taxes are paid, the gift tax to the net amount going to the recipient. The catch is, if you die within three years of making a taxable gift, the amount of gift tax you paid gets kicked back into your estate.) But first brush up on your King Lear.

Attorney Scroggin relates the story of a doctor who transferred large sums to his children as a way to reduce estate taxes. Then his wife divorced him, taking half his money. A malpractice case took what was left. The doc asked the kids to help out. They told him to take a hike.